Critics at Salem hearing include lobbyist for HR Distillers

SALEM — At an initial public hearing Tuesday, parties on all sides of the issue slammed a bill that seeks to alter but not end the state’s monopoly on liquor sales in Oregon.

Senate Bill 1559, introduced in reaction to a drive by big grocery chains to fully privatize liquor sales with a November ballot measure, would allow grocery stores of 10,000 square feet or more to sell liquor from their shelves, while keeping the state in control of the supply.

Proponents see it as a compromise in a long-standing tug of war between big grocery stores and the 248 state-licensed liquor store owners, among others. If passed, the policy would allow about 650 grocery stores to stock distilled spirits.

But Tuesday’s hearing showed that there’s overwhelming opposition to the bill among key players, who gave little indication that they will come to agreement during this short legislative session.

“You’re trying to fix a dinosaur,” said Joe Gilliam, a lobbyist for the Northwest Grocery Association, the group pushing for full privatization.

Gilliam added that, while the bill recognizes that “the current retail delivery system is broken” and “that consumers should be able to access distilled spirits in the grocery store right next to other alcoholic beverages,” it “ignores the (private market) efficiencies” that could be gained by eliminating the state-controlled wholesale model altogether.

But Steve Brown, the owner of two liquor stores in Salem and Lincoln City, said he believes that SB 1559 would push about half the liquor store owners out of business because of increased competition. If the state wants to reform the system, he said, it should invest some of the revenues it receives from liquor sales into modernizing existing stores.

The experience with the recent voter-approved privatization of liquor in Washington — which ultimately increased liquor prices for consumers, thereby contradicting the campaign claims of big grocers that favored privatization — played a part in Tuesday’s debate as well.

Paul Romain, a lobbyist who represents beer and wine distributors, said the current system under the Oregon Liquor Control Commission is a “very good system.”

“People think by simply eliminating the liquor control commission from the picture you will lower prices, but the opposite is actually true,” he said.

Hasina Squires, a lobbyist for Hood River Distillers, said the business was “absolutely crushed” in Washington after privatization there. Small craft distillers argue that privatization decreases liquor selection in stores, to the advantage of big-name brands.

“There will be a healthy debate that will occur in November and we’ll see exactly if voters are willing to accept increased prices and increased outlets, and support big business over small business,” she said. “We’ll let the chips fall where they may.”

Sen. Lee Beyer, a Springfield Democrat who championed SB 1559, said after the hearing that he will continue to try to generate support for it. But he acknowledged that he doesn’t know yet whether it will move out of the Senate Business and Transportation Committee.

Beyer added that he expects big grocers to raise a multimillion-dollar campaign fund to try and pass full privatization on the November ballot, as Costco did in Washington. That will put them in a very strong position to win at the ballot box, if lawmakers can’t compromise on an effort to modernize the current system and pass legislation this session, he said.

“Where are (privatization opponents) going to get the money to oppose them?” he said. “How are they going to tell their side of this?”

Whether under the current system, the “hybrid” model, or full privatization, the state and Oregon cities and counties are expected to continue to collect about $200 million annually in revenue from liquor sales.